Mobilisation of domestic and intra-African resources should be the way to go if the continent is resolute about putting its economic structural transformation into high gear and accelerate growth, according to experts attending the 2012 African Development Bank (AfDB) Annual Meetings in Arusha, Tanzania.
Taking part in a high level debate on how Africa could transform itself, with the African people devising and taking full charge of their own home-grown strategies, the experts underlined the need to prioritise energy and infrastructural development.
But before the continent takes a new turn under ‘Africa Transforming Africa’, there has to be a mechanism to oversee and coordinate implementation of infrastructure projects comparable to any of the best in industrialised countries.
They suggested creation of a lead institution that would be specifically charged with coordination and implementation of regional projects.
The idea, however, didn’t go well with AfDB President Donald Kaberuka who quickly cautioned: “We have enough institutions already. We should not confuse creating institutions with actions.”
In his opinion, Africa could work with its regional economic communities and get the desired results, provided those groupings were given the necessary capacity.
‘Let us identify problems and get things done. We have done enough studies, we know where to get funding and skills ... but getting them together is a problem,” Mr. Kaberuka said, pointing out that implementation of Africa’s lagging projects lacked effective enforcement.
“We need to look at new ways for financing infrastructure across the continent and bring innovations into the instruments we currently have in place,” suggested Andrew Alli, president and chief executive offer of Africa Finance Corporation in Nigeria.
Mr. Alli, who was among panellists at the debate, said many African countries were very keen to get investment in infrastructure going and were open to new ideas.
A veteran in financing and investment management, Alli urged African governments to improve their investment climate by making it friendlier to attract money.
“There is a shortage of investible assets, but many countries can start developing capital markets. A lot of things and hard work need to be done to get infrastructure projects underway because they take a long time and huge amounts of money,” he said.
Mr. Alli, a former investment officer with the International Finance Corporation, said that all investors, both local and foreign, should be treated equally to avoid the risk of complications.
He encouraged African public and private companies to undertake cross-border investments.
Meanwhile, Nigeria’s finance minister, Ngozi Okonjo-Iweala said Africa’s housing and construction industry was largely overlooked despite its potential to unleash tremendous growth.
“There is no good mortgage finance system in many countries. We need to think creatively how to tailor that in the environment we have now and governments have the duty to do the homework first,” she said.
On intra-African investments, the minister noted that there was enormous scope for such ventures as many banks were already spearheading business through branches outside their home countries.
“Africans need to talk to each other about intra-African investments. The potential to develop ourselves and each other is great without waiting for FDI (foreign direct investment) to arrive,” she said.
Though some experts put Africa’s requirement for investment in critical infrastructure at USD 93 million with a current gap of some USD 45 million, Mr. Kaberuka doubted the figures saying he didn’t know where they came from.
“I have a feeling that private money is there to be put into infrastructure. We need to close the deficit but it’s not just about money alone. We can do more on road transport and when it comes to investment in energy projects, there is a lot of wasted opportunity,“ Mr Kaberuka remarked.
“Africa needs roads that are as good as those in Europe, America or Latin America. Africa shouldn’t accept anything less than the best in the world,” the AfDB chief added.
Besides infrastructure development, participants expressed varied views about the quality of growth in Africa in recent years and what it means for improving the lot of the poor.
In the past decade the continent registered promising growth at an average of 4 percent, but now studies show that Africa does not require just a fast growth but it should achieve the rate of at least 7 percent to keep poverty down and create jobs.
On this Mrs. Okonjo-Iweala said that each country should do its own analysis and identify what was impeding growth.
“Every bit of analysis shows each country is looking at infrastructure as a stumbling block to setting the stage for growth,” she said, observing that other impediments concerned issues of skills, governance and political stability.
“Growth does not at the same time reduce poverty,” said Eleni Z. Gabre-Madhin, chief executive of Ethiopia Commodity Exchange.
“When we look at African solutions, the first thing that sticks out is broad based to take the rural poor with us. Ethiopia’s experience shows that we have been jostling with other fastest growing economies in Africa but our poverty reduction has outpaced growth,” she said.
Through its commodity exchange, Ethiopia has managed to raise proceeds from coffee from about 38 percent to 65 percent with positive impact on the earnings of its 15 million small growers.
According to Mrs. Eleni, the Ethiopia Commodity Exchange was not modelled after exchanges in the West but “it is uniquely tailored to focus on smallholders in the country so that they can forge ahead.”